Swatch clocks record sales of $7.5 billion in 2011

Swatch Group, the world's biggest watch manufacturer, on Tuesday announced record sales last year of 7.14 billion Swiss francs ($7.5 billion), citing strong demand for its timepieces and jewelry, particularly in emerging countries such as China.

The Swiss watchmaker warned that it would face a "major challenge" in 2012 improving on already high sales, which jumped almost 11 percent last year from 6.44 billion francs in 2010.

Sales would have been even higher but for what Swatch described as the "catastrophic" strength of the Swiss currency, which reduced sales figures by 696 million francs. Most of its products are sold abroad in dollars and euros and therefore affected by exchange rate fluctuation.

The company has successfully broadened its portfolio in recent years and gained a strong foothold in Asia, despite competition from local companies and counterfeiters.

Swatch is also trying to free itself from a long-standing requirement by Swiss competition authorities to sell components such as gears, springs and wheels to its smaller competitors.

Last year, it succeeded in getting permission from the Swiss Competition Commission to reduce its supply of these so-called mechanical movements to rivals by 15 percent compared with 2010. The company is hoping for a further reduction next year and eventually a complete lifting of the supply requirement.

"The market now has several suppliers who could produce these movements," said spokeswoman Beatrice Howald. "We don't want to be forced to deliver to everyone."

Swatch shares were up 3.3 percent at 375.80 francs ($395.72) on the Zurich exchange late Tuesday.